Is cyber insurance worth the price for a small business?

Published May 10, 2017
Image for 2017 cyber seminar post.jpgClick on this image to view an infographic from the National Cyber Security Alliance.
 
By JILL WHITE, CRIS, CWCA
Account Executive

You don't have to attend our free seminar on May 23 to protect your business against cyberattack. Here's all you need to do: "Craft plans for preventing, detecting and reacting to cyberattacks — then protect the business with insurance."

That piece of advice comes from Investment News, but while we happen to agree, we also know that some business owners are dead set against buying cyber coverage, believing the cost of insurance outweighs the risk of attack. Others may be unsure of whether cyber insurance is worth the price.

It's for those people in particular that we designed the seminar, "Cyber Risk and Your Business: Know the Exposures." 

Now if you're staunchly opposed to cyber insurance, that's fine; no one is going to make you buy it. But if you're going to do without cyber insurance, you'd best have those aforementioned plans in place because at some point someone is going to attempt a security breach of your business, and studies show that 60 percent of small companies that suffer a cyber attack go out of business within six months.

During our seminar, nationally recognized cyber risk expert Charles Bellingrath of ARC Excess & Surplus, LLC will:

  • define and explain common and emerging exposures.
  • give examples of breaches.
  • explain sources of attacks.
  • show the costs associated with breaches.
  • detail laws and regulations regarding cyber issues.
  • outline best practices for dealing with a breach.

In short, he'll provide you with information you'll need to prevent, detect and react to attacks.

Why you need to be prepared

In its May 5 article "Why Cybercrime Is Targeted at Small Businesses," the website Small Business Trends reports that cyber criminals are using breaches of smaller, less secure companies to find routes into the systems of the larger companies with whom the small ones do business.

Or as the Small Business Innovation Research (SBIR) program puts it in its tutorial "The Impact of Cybercrime on Small Business":

"...  small-business attacks are increasing because they present cybercriminals with an easy way to gain access to customer credit card records and bank accounts, supplier networks and employee financial and personal data. Smaller companies tend to have weaker online security. They’re also doing more business than ever online via cloud services that perhaps don’t use strong encryption technology. [Small and medium-size businesses (SMBs)] have resource constraints and often ignore cybersecurity in favor of day-to-day operations or other financial needs. Yet SMBs remain a gateway to gain access to clients, business partners, donors, and contractors working with the SMB . . . a backdoor into many large organizations. To a hacker, that translates into reams of sensitive data behind a door with an easy lock to pick. If a small business has any Fortune 500 companies as customers, they are an even more enticing target — they are an entry point. This is an increasingly common type a cyberattack known as a secondary attack."

And, as the website CIO.com reports, cyber attacks of all kinds are only becoming more common: 

"Attacks against all business are increasing. Small businesses tend to think they are safely tucked away from exposure, but Symantec found that over 30 percent of phishing attacks in 2015 were launched against organizations with less than 250 employees. Symantec's 2016 Internet Security Threat Report indicated that 43 percent of all attacks in 2015 were targeted at small businesses."

So, is cyber insurance worth it after all?

Maybe after learning about the risks and everything you need to do to protect yourself, you'll decide that cyber insurance really should be a part of your plan. 

As Investment News notes, cyber policies cover such losses due to breach as:

  • restoring lost data.
  • fixing or replacing damaged hardware or software.
  • hiring public relations professionals to prevent reputational damage.
  • paying for credit monitoring for affected clients.
  • hiring forensic experts to investigate an incident.
  • the costs of lawsuits, regulatory fines and penalties.
  • profits lost through fraudulent wire transfers.

What all that protection will cost you depends on factors including what industry you're in, what kinds of services you provide, the extent and nature of your cyber risks and exposures, your revenue and what other policies you have. A small business with relatively little exposure may purchase cyber insurance for as little as $1,000.

Attending our seminar, meanwhile, costs nothing other than your time, from 8:30-10:30 a.m. on May 23. That, we're sure you'll find, is a more than worthwhile investment.

REGISTER 


About Jill White and Sylvia Group

Jill_White_cropped.jpgLicensed as a Massachusetts Producer for property and casualty, life, and accident and health insurance, and certified as a Construction Risk Insurance Specialist (CRIS) and Workers Compensation Advisor (CWCA), Jill White combines insurance training with knowledge gained from 15 years in the financial services industry to develop a thorough understanding of each client’s unique business needs and challenges. Devoted to protecting her clients, their businesses and everything they’ve worked hard to achieve, Jill conducts a full and thorough review of each business to ensure clients understand exactly what they’re paying for: which risks and exposures are covered, which aren’t and what gaps may exist. She then explores all available options and works with the client to design the insurance program that best fits the business’ strategic plans and goals.

Sylvia Group helps businesses and individuals protect their future by designing insurance, benefits and financial planning programs. We’re a locally owned agency known for our commitment to our clients and our community, as well for our industry expertise. Founded in New Bedford, MA, in 1950, headquartered in neighboring Dartmouth, and serving businesses and individuals throughout Massachusetts, Rhode Island and beyond, Sylvia Group is certified as a Woman Owned Business Enterprise with the Massachusetts Supplier Diversity Office and has the distinction of being the first six-time recipient of the Five Star designation awarded by the Massachusetts Association of Insurance Agents (MAIA) for all-around agency excellence. 

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